NEW DELHI: Bharti Airtel, the biggest mobile service provider by subscriber base in the country, narrowed losses from African operations in June quarter, thereby sending out a positive signal to investors.

The Sunil Bharti Mittal-led telecom behemoth had been reeling under pressure amid losses in its African business, but the June quarter loss halved to $78 million from $154 million a year ago. This happened mainly due to stable currencies in most markets.

Even through consolidated net profit for the quarter fell 30.8 per cent to Rs 1,462 crore from Rs 2,113 crore reported for the year-ago quarter, Dalal Street is happy as the number was still higher than a consensus analyst estimate of Rs 1,100 crore.

The stock jumped about 3 per cent in early trade on Thursday, but weakened subsequently. At the time of writing of this report, the stock was trading about 2 per cent down.

Several analysts and brokerages have raised their outlook for the stock following the June quarter earnings.

Bank of America-Merrill Lynch (BofA-ML) has maintained a 'buy' rating on the stock with a target of Rs 426. "The risk-reward ratio is getting increasingly favourable and the company is well placed to emerge stronger in both voice and data markets. Going forward, there is limited room for disappointment from Bharti Airtel's Africa numbers," the brokerage said in a note to its clients.

Yes Securities said Airtel owes its better-than-expected net profit to stable currencies in Africa. "Overall, the business environment in Africa is showing signs of improvement. At the same time, the company has also been able to monetise its tower assets to pare debt related to the Africa business," said Nitasha Shankar, HoR, Yes Securities.

Bhavesh Gandhi, AVP, IIFL Research, is positive about further upside on the Airtel stock. "The stock is likely to see about 15-17 per cent upside from current level. We are buyers of the stock but we would be cautious on further price movement," he said.

IDBI Capital Markets & Securities, however, seems a bit disappointed. "We are not very sure if the Africa operations have structurally started looking better or not. Ebitda and margins are doing well, but valuations remain a concern," said Urmil Shah, research analyst, IDBI Capital Markets & Securities.

Most brokerages are concerned about the possible impact from the launch of Reliance Jio, the 4G services of Reliance Industries.

Morgan Stanley has maintained an underweight rating on the stock with a price target of Rs 294, mainly because of the forthcoming challenge from Reliance Jio. "Data is the key future growth driver, and hence is the biggest concern. Reliance Jio's entry in the second half of 2016 will likely increase the competitive intensity. The forthcoming spectrum auction can put earnings (of Bharti Airtel) at risk, thus implying a higher leverage," it said.

IDBI Capital Markets & Securities has a negative outlook for the telecom sector and believes with the advent of Reliance Jio in October, there is going to be a shift in market share. "A large player like Reliance Jio will have its network underutilised and the price competition can be significant," Shah said.

Gandhi thinks had the threat of Reliance Jio not been there, valuations of Airtel would have been higher. "The biggest risk and concern is Reliance Jio. But there are a lot of revolving questions like what is the data package going to be like and how will it be priced. It is a wait and watch policy on the stock," he said.

Shankar thinks Jio launch is an overhang but is still hopeful on Bharti Airtel over the long term. "Bharti Airtel is favourably positioned to encash the opportunity on the data side in the Indian market, both on 3G and 4G segments. While the overhang of increased competitive intensity on account of Jio's entry is a near-term overhang, from a long-term perspective, Bharti Airtel should emerge as a winner in the sector," she said.